Pickering Energy Partners formed a “strategic partnership” earlier this year to acquire and develop oil and gas assets.

According to a release in July, the partnership, with a large, unnamed institutional investor, will target $300 million of capital deployment alongside “premier operators” in the Permian Basin.

On Nov. 16, Dan Pickering, founder and chief investment officer of Pickering Energy Partners, said the firm now has $450 million worth of capital to deploy.

Pickering spoke with Hart Energy following his presentation at the Executive Oil Conference in Midland, Texas, about the opportunities he’s seeing in the Permian Basin and whether he expects a deal before year-end.

Jordan Blum: Following up from our session on stage, just wanted to get your thoughts on your investment and acquisition strategies right now with Pickering Energy Partners development and what are you looking to do in the Permian?

Dan Pickering (00:34): It’s a great time to invest in the oil and gas business. From our perspective, the world needs more U.S. energy. We’re focused out here in the Permian Basin in Texas in general. We’ve got $450 million worth of capital to deploy, and the Permian is opportunity-rich. Hard to get deals done, a lot of volatility in the space, but really excited about continuing to invest in oil and gas.

JB: Can you talk a little about the challenges with getting the right valuations and not wanting to overpay and where things stand?

DP (01:08): In a market that has historically seen a lot of volatility, this year alone—$125 oil, $75 oil, $9 gas, $4 gas. So, in a volatile market, you have to be smart about what you pay. And in a volatile market with relatively high prices, you've got folks who want high value for their assets. And so, finding that equilibrium has been tough. But again, the opportunity’s there. So, our view is patients continue to work specific deals, and the market probably comes to more of an equilibrium in 23.

JB: I don’t know if you’ll surprise us with a holiday deal, but are you feeling pretty good going into next year?

DP (01:50): The pipeline of opportunities is good. We’ve been on 20 things this year. We have another 10 that we’re working right now. So, probably, nothing this year. Things will slow down with the holidays. But ’23, again, I think buyers and sellers come together a bit better, so we’re hopeful that we’ll deploy a lot of capital in ’23.

JB: So, this is a nonoperated focus, but can you talk a little bit about if there’s any preference between the Midland and the Delaware Basin? The pros and cons of both?

DP (02:20): When we think about the Permian, there’s no bad spot, if you will. It is an opportunity-rich basin still, even after 10 years of the shale boom. We tend to look a little bit more toward the Midland Basin, just because there’s more activity in general there. There’s a more fragmented operator base. As a nonop player, we just want good partners. If they’re good and smart in the Delaware, happy to deploy capital there. But we want good and smart operators in the Midland as well. So, our opportunity splits probably 75% Midland, 25% Delaware.

JB: And with everything going on geopolitically and pricing-wise and cycles, I mean, there’s a lot of volatility, but at the same time you feel like there’s better visibility at the same time?

DP (03:09): Yeah. I mean, I think things were crazy in ’22, and we’re starting to come more toward understanding what the next two, three, four years look like. This energy security dynamic I think is real. And so, when we think about visibility out for two or three years, trying to supply the world with safe, clean, affordable energy from the U.S., to us that says we will find opportunities. And because things have been so crazy this year, as they settle down, it should be a good environment for transactions to happen.